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U.s. 20, Libya 10, San Francisco 7, Us 7, Moody 's 7, Egypt 7, United States 5, Cairo 3, Humana 3, Tesla 3, Liz Claman 3, Avis 3, Warfarin 3, Medicare 2, Abercrombie 2, Berkshire Hathaway 2, Sam 2, Liz Macdonald 2, S&p 2, Blackberry 2,
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  FOX Business    FOX Business After the Bell    News/Business. Stock  
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    September 12, 2012
    4:00 - 5:00pm EDT  

after late yesterday basically growth in mobile ad. david: turning the tide on facebook at least for now. the bells are ringing on wall street and the market doing crazy gyrations today. basically ending up flat altogether, the dow virtually not moving at all. the s&p up .2%, the they're all about the same in terms of practical gains all the indices. germany coming out with a ruling of what the ecb can or cannot do. again, big speculations as to whether the fed will be printing more money, that is what it is all about. when the bells ring the action really begins. legendary investor is here.
the market is artificially inflated, why he's putting his money in the one european country that is still a good bet. back to san francisco with liz claman live at the developers conference. what do you have coming up? liz: i'm here at intel's developer conference, we will hear about gestures. you can see up on the screen, make it into a fist and it will actually click into whatever you want to do. intel started, as you know, david, as a startup back in the 60s, and that is what we like to focus on. coming up, get around basically you can rent your car and make money not doing anything in the garage were taking extended vacation, you can make a lot of money on this.
back to you. david: i like how this life imitating art. like avatar. making things more discreet. before we go back to san fran, we tell you what drove the market with the data download. stocks ending slightly higher. new multi-year intraday highs before they pulled back ahead of the clothes. the euro rising from intraday high. after a german court confirmed the bailout plan. u.s. treasury prices fell lifting yields three-way ties.
giving us his top three plays, his last call on the show up almost 50%, wait until you hear what he is recommending right now. one european country he is looking to put his money into to work with. going pretty well, kind of a calm day on the market, and a drop in negative territory. ending up almost flat, what with the gyrations all about? >> the credit downgrade, the fiscal cliff issues, europe is not growing, but traders are listening and hearing from the printing press. right now what we will see tomorrow. $300 billion of assets purchase. nothing but smoke and mirror.
david: a lot of people saying it clears the way. not the german people, getting since the german people are getting fed up with filling out the greece. any optimism about what the german court did? >> the german people never, ever wanted the euro dollar to begin with. they're sick and tired of all of this. considering the fact they absorbed eastern germany not too long ago implement a lot of austerity to get them to where they are today. problems in spain, italy and now france, who can blame them as the court saying they are liable. don't make any mistake about that right now. david: we want to bring it back
home, chris, let's get right to it, last time you were here you recommended avis. i understand you're still going with avis, and what other stocks do you recommend right now? >> we think avis is still undervalued. the stock has got about $3.20 of free cash flow in share. i don't see a reason should not be trading close to nine times that number. david: another one of your picks, a huge day, 75%. a strong history of steady free cash flow generating $100 million of free cash flow, $1.90 per share. the stock at a minimum worth about $24 per share.
trading 20, 25 free cash flow, 12 times revenue. around 19%. i don't think the real reason they should be trading at such a big discount. david: you look at the slowdown in the economy, the gdp is lower than ever. 1.7% barely above that. a word about the retail sector slowing down? >> we have a dramatic decline in gdp, most of that due to foreign currency, so a lot of the businesses we are looking for have proven themselves resilient in a really vicious economic environment like we saw already. if we have a little bit of weakness, there will be another recession.
they will not be as disciplined as they have been in the past. david: the fed's decision coming out tomorrow, depending on what they do, would that change your investment strategy in any way? >> not at all. they have gone through raising of interest rates, decreasing of interest rates, the market kind of stalled out but that would not have necessarily been a great time to abandon stocks because the fed was raising rates. monetary policy is a factor was an influence on the economy but we're the bottom of the investors looking for things we can make money regardless of what is going on with interest rates. the market went up so i didn't go up but a lot of smart investors making great money in the 70s during a time interest rates went from 5% to 15%. you can find your spot i if you are optimistic.
david: good to see you. the s&p is up more than 23%. be careful, the rally is being artificially propped up by the federal reserve. the chairman of rogers holdings and my friend from singapore. all right, the fed has a mandate not about pumping up the stock market, making sure the economy is strong and unemployment is low. it has failed miserably to turn things around, so how can the fed justify another round of money printing when the past money printing has not generated the economy? >> tell him the same thing, he is not here to pump up the stock market but he thinks he is. it is astonishing to me.
david: he has two mandates. maintain low unemployment. he has failed because it doesn't have to do with the stock market. spending way more dollars of her money, my money and everybody watching the show's money and it will not do us any good. caching thcash in the system, i, this will be a mess. david: you, by the way, say qe3 has already begun. what are they buying, by the way? >> garbage. david: looking at the balance sheet, they have already begun to print more money to add to
their portfolios. >> get out the numbers, they publish it, read them, get out the balance sheet. they did not come from the tooth fairy. somebody is buying things with your money and my money. david: is that why we have seen gold going up? >> of course it is. everything is going up. david: why hasn't the dollar crash? why hasn't it actually crash? why haven't we seen the increase in interest rates? >> started going down again but the answer to your question, we can buy dollars. that is what they do. i own the dollar. i think everybody else will buy.
as a means of exchange. i also own some as an investment. david: are also looking at russia. they have not gone in yet, but yohe really wants to be in bed with vladimir putin? you know any big investment that has made it, here' had somethino with it. >> have been negative ever since. 46 years negative. i find myself to my astonishment to my amazement saying they are really changing. i cannot defend their past actions, but as a matter of fact last weekend making real chang changes. so give us a billion dollars and
the will take away. now saying give us a billion dollars, we will put up a billion dollars. this is all new. he is spending billions of dollars in the far east building a whole new transportation. how might you invest? >> i don't know yet. david: we teased you have one country from a company in europe in your investment. what is it? >> i thought w you were talking about russia.
i own swedish. david: why is sweden worth holding on? anything that begins with a k. why is that? they let people go bankrupt, a terrible thing and they started over, a sound economy, balanced trade services, these guys are running an economy that i would run it, not to wait. david: her daughter the number one in the school in singapore. david: demonstrators attacking a u.s. embassy in libya breaching the wall for the u.s. embassy in cairo. the deadly attacks, three others
as well. will events like these drive investors out of the region just when they were getting back into the region? a money manager who says no. now it's actually the perfect time to get into a place like egypt. apple announced the highly anticipated iphone 5, did they deliver on all the promises? live with reaction and analysis from a top analyst and liz claman a chance to sit down with the ceo in a fox business exclusive, what does he want to see the fed do tomorrow? coming up. [ male announcer ] what if you had thermal night-vision goggles,
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david: shares of teen retailer american eagle hitting a new high today after unveiling a special dividend on top of the regular quarterly payout. the details with nicole petallides at the new york stock exchange, people were buying. nicole: that is right. the teenagers are very fickle, so let's talk about what is going on with a couple of teen retailers. a new high on a special dividend
in addition to the regular quarterly payout, one of the analysts coming out and talking about the fact they have good cash flow, the back-to-school results are stellar and lower prices should help them along. abercrombie and fitch, now cnn is reporting abercrombie is hiring gold to ward off pressure from investors. a fast-moving store or maybe cheaper alternative. back to you. david: back to san francisco or liwhere liz claman spoke to intl ceo in a fox business exclusive, talk about the fed, right? liz: more importantly perhaps is what happened with their numbers. last week they said they were not going to have the number in revenues they had expected, and
so i asked specifically what was it? worse than expected slowdown in china and brazil, the two big engines. i also asked the ceo of intel about a couple of things. what do they have to hear from the fed as far as being a business leader who will invest on the news, but also apple chose today, same day the intel developer's conference to make their big iphone announcement, what is that about. what is at relationshi the relan intel and apple really like? >> they're a huge customer with us, we're doing good things together. i am optimistic about them launching next year. would love to be in their phones and stuff, but right now i owe us only runs on the architecture they use. would love to help them do a
great phone and great tablet, but it is up to them. they don't mess with success, they have a pretty good formula that works for them and what we have to do is something so superior to what they can build themselves. we are working as hard as we can on that stuff. liz: what are you as a business leader needs to see from the federal reserve? >> return to fiscal sanity, we have to be able to fix the debt, cannot spend money we don't have, this has to get resolved. liz: and there you have it, david, he is a very thoughtful ceo, sits on the president's job council, both sides. a mitt romney supporter but has been very patriotic saying to the president what can i do, sat on the job council but is very concerned about our fiscal state as you just heard. david: thank you. apple unveiling the highly
anticipated new iphone 5 today. did it live up to all that hype? is it a game-changer for the industry? weighing in live from the event. egypt's stock market is soaring what could this weeks events scare traders out of the region? one portfolio manager who says there is still money to be made there. and the very latest from the region in the white house reacting to all that straight ahead on "after the bell." [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world.
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david: apple unveiling the iphone 5 today.
it will be 18% thinner, 20% lighter, a 4-inch screen, faster data and new connectors, so is it a game-changer? does not hold apple's market share where it is. great to see you, karl, thank you for being here, appreciate it. the iphone 5 will set new records for sales of any electronic device, that sounds like a game-changer. why? >> it really is. we have to remember the iphon iphone 4s was the best-selling consumer electronic device of all-time selling 4 million units in the first weekend. but the iphone 5 is 2012 update to that classic design. that will really make this fellow. we could see 10 million units by the end of the month. david: you do have competition that they didn't have before. in a lawsuit with samsung, but
still the samsung galaxy is out there, and a lot of people are impressed and we don't think there is competitive pressure weighing against this? >> there is certainly competitive pressure but we do surveys of consumers. 42% of smart phones people intend to buy a smart phone saying they want to buy an iphone. that is greater than all android phones combined in the united states. with that kind of intent to buy it, we will see a large market. david: they're going to be selling $99. of course that is the older version. the cheaper price also comes with less connections in the iphone 5 does. there'does the 1.2 gigabytes peh
compared to those with slower connection. >> apple is covering all the price points. that is a keeping time to address a large body of consumers. you will have the iphone for which is a great phone given away for free on contract. i think they're doing a great job of going up against the competition and frankly at this point over 50% of americans already have smart phones, so getting into mainstream, mom and pop buying smart phones and it has to be really easy to use and apple has set the gold standard. david: what about the corporate market, lot of corporations going for the blackberry. is this going to tap into that market? >> the iphone has been adopted by companies a lot of the fortune 500 are already using iphones. that sai set in a couple of weee
will have blackberry jam where we get our first peek at the blackberry 10 devices. in some sense, that is they're rebooting of the company and in many ways trying to emulate what steve jobs did with apple and come back from near death. they really have a shot at doing that. the software they're doing is incredible. david: of course, if they don't that is a whole new market apple can get into. good to see you, appreciate it. president obama of course condemning the attack that killed u.s. ambassador to libya, but did he go far enough? and what about the apology that occurred just before the attacks? all of this coming next. plus do you have a car that sits in the driveway? we have a way for you to make money, live in san francisco.
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david: the attack on the u.s. con sue late in libya killing ambassador christopher stevens and three other americans sparking a firestorm of responses from folks inside and outside the administration. fox business's rich edson at the white house keeping track of all of this. rich, before we get the ins and outs. let's talk about the ambassador. this is a real hero who sacrificed his life so the others could get out of the consulate alive, right?
>> that's it, david. you have others appreciation in washington for all those in foreign service in dangerous places like libya. secretary of state hillary clinton spoke about that this morning before president obama. >> he risked his life to stop a tyrant. then gave his life trying to help build a better libya. the world needs more chris stevenses. i spoke with his sister ann this morning and told her that he will be remembered as a hero by many nations. >> so, david, from here it's about the government here in the united states and in libya investigating exactly what had happened. senior administration official telling fox that there are early indications that this was not spontaneous perhaps planned. also what folks in congress are hearing from the intel community. that is something though that's still, senior administration officials are urging us still very early in this process and they're
still looking into it. david: of course, finally, rich, there are still questions about this letter that was sent out by the egyptian inembassy. went out as a tweet and revision of a tweet that sort of apologized for this film done over here. it certainly may not have caused the violence but certainly didn't stop it from happening right? >> president obama according to the white house addressed this in an interview at cbs they were under stress there, possibly in danger there. they were trying to possibly quell the violence. he is not going to condemn them in cairo for that but the administration has been stressing they did not approve that tweet before the u.s. embassy in cairo sent it out. david: rich edson, from the white house, thank you very much, rich. protesters attack diplomatic compounds in egypt and libya as we were just talking. libyan ambassador and three staff were killed. where does this leave the region get any kind of
foreign investment? this is a very tough sell today when you see the mobs controlling the streets to say this is a region in which you want to invest. how do you do it? how do you make the sale? >> it is a very fair point. i think what you see in terms of the headline risk adds to volatility near term, median term, no doubt. we have to look what the market is factoring in. the market understands that egypt's a work in progress and they're looking past all the growing pains. unfortunately the cost the revolution is in time, in money, unfortunately also in human lives. david: but investors and businessmen are looking at the situation, the mob scene we just saw saying look if the u.s. embassy can't protect its personnel, how am i as a u.s. business person going to be protected? >> absolutely. i think that is the first and foremost for the administration to provide a
environment to show containment. you've seen this in pakistan, lebanon and other parts of the world where you have event risk, if you manage it you see them coming back in but they ease in. the front-runners are really the domestic players and then the foreigners come in. david: they do say you buy low. i can imagine right now the market is pretty low, right. >> absolutely. if you look from valuation standpoint, despite the run-up this year, it is up 60% but still up 20, 25%. david: when you say it is up, amalgam of egyptian public companies, right? you can buy into that a etf, egpt? >> absolutely right. you look at the domestic industries up in the 50% range. you really think that maybe the story has turn ad corner but still down about 25%. david: we should mention it is up 57% in this year. it was down 49% in 2011. it has to come up another 25% before it will be at its
peak. correct me if i'm wrong, they still don't have a parliament. >> correct. david: they still don't have a constitution. >> correct. david: it is early days. the muslim brotherhood could take over. >> you're really looking at what the market is assuming what could go wrong versus what is the upside. as of now i think the market assumes this is a real economy. this is an investable market. has institutional framework, whether muslim brotherhood or not. you can build upon that. very unlike the other north african countries like libya where you don't have institutional framework. david: we should know by the way egyptians all over the middle east are known as the best deal-makers a lot of companies in the arab emirates will not hire their own people but egyptians to be managers of their company. >> human capital is strong pitch from their standpoint but one other thing. egypt is the role model for the arab world. think about it. egypt is a well-diversified
economiers has no oil. so they don't rely on that, that is for sure. >> primarily agriculture, service, industry, manufacturing. that's what saudi arabia wants to be 30, 40, 50 years down the line. they need to have the diversity. you can't be tied to the swings in the oil market. david: as you know the u.s. government today is deciding whether u.s. funds to places like egypt will continue based on what happened in libya. u.s. funds going to libya. if those fund dry you, if the united states says look, we can't give money to countries playing a part, even if it is not direct in the death of u.s. citizens what happens? what happens to investment in those countries? >> that is a very critical point because there is a reason why the market has run up 60% this year. part of the reason is the debt waivers. the united states waived about one billion. maybe there is more to come. imf is putting 4.8 billion in the market. you have qatar and saudi, they're all stakeholders. a stable egypt is a stable
middle east is a stable environment broader. politically it is critical to the united states. so u.s. walking away i think is a direct correlation with the markets pulling back, if that were to happen. so there is nothing fundamentally different in egypt versus 18 months ago. the market is only rally, because u.s. interest, u.s. commitment. if they were to reverse i would be very surprised if the market holds its gains. david: thank you very much. from sm advisory group. moody's warnings of a potential cut of the u.s. credit rating came with a suggested solution, entitlement reform. there's a novel idea. but with half the country deriving some of their wealth from a government check is our credit rating already lost? liz macdonald is here with that story. liz claman joins us live from the intel developers conference in san francisco with more. liz, what do you have coming up? >> nobody is thinking about moody's downgrades or the federal reserve here unless we bring it up. instead they're thinking of ideas. how about, you do know only
8% of the time you're actually using your car. why not make money the other 92% of the time? peer-to-peer car sharing. we have the cofounder. it will be our first female cofounder of this year's 3 days in the valley. our fifth year in a row covering silicon valley, san francisco and the big ideas here. want to try to crack it? yeah, that's the way to do it!
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sharing what you know. let's do it grandpa. that's why humana agents will sit down with you, to listen and understand what's important to you. it's how we help you choose the right humana medicare plan for you. because when your medicare is taken care of, you can spend more time sharing your passions. wow. [ giggles ] [ male announcer ] with the people who matter most. i love you grandpa! i love you grandma! now you're a real fishman. [ male announcer ] humana. >> i'm adam shapiro with your fox business brief. wall street edges out gains for a second straight day. the markets got an early boost as investors cheer ad german court decision to clear the way for that country's participation in the european rescue fund. investors remain wary ahead of the federal reserve policy announcement tomorrow. fewer homeowners were underwater with their mortgages in the second quarter thanks to a
rise in the price of housing. according to corelogic the percentage of homeowners homes worth dropped 2%. dole foods confirms it is in advance talks for a possible sale of its packaged foods and asia fresh business though definitive agreements have not been signed. dole plans to continue talks with other parties regarding those units. that's the latest from the fox business, giving you the power to prosper.
david: liz is live in san francisco with "3 days in the valley". how does this work, liz? >> dade, i know you don't have a car being new yorker or at least just yet but i have one. i drive it to work. sitting there for nine hours, 10 hours, 11 hours and then, what, i could have been making money off that. according to the founders of a new company called get
around. here in silicon valley in san francisco, this place is full of ideas. let's get the big idea from the two cofounders. this is peer-to-peer social car-sharing. who even knew. here comes the idea which i think is absolutely fascinating. sam, how does it work? >> get around is really addressing the problem of we like to call car overpopulation. here in the united states we have 250 million cars and 23 hours a day we're not using them. get around is new way to conveniently share you will all the cars we already own. you can rent using smartphone to rent anything from prius, bmw to tesla roadster. >> the big question, jessica, if i do this how do i know that somebody crazy isn't just going to get in my car crack it up and get some kind of accident? what is the process of ge getaround? >> with getaround you can sign up and start sharing instantly.
get the iphone app or go to the website. we do driver screening on anyone before they're able to rent. that includes a driver record check through the state dmv as well as identity verification and social verification. you build up credibility on getaround. renners rate owners, owners rate renters an we have insurance through berkshire hathaway. liz: if somebody gets in an accident in my car it doesn't affect my insurance? >> correct. liz: you went to sacramento to make sure there was a law to eliminate a barrier. is it true you had trouble in the startup one of the most regulated industries is auto industry and nobody would insure you except one company? >> insurance is not the fastest moving industry. so early on when we were trying to explain this concept of peer-to-peer social car sharing people thought, okay, it is interesting but will this really work? it is not proven. we can't show you data until
we get insurance. liz: can't show you data because it is brand new. >> we talked to almost 100 different insurance companies. one of the innovative ones was berkshire. we see how this might work. we have a lot of excess capacity. we managed to convince them to work with us. liz: buffett and berkshire hathaway came through. he is known for taking risks. how much money can i make on the car? say i have a little lexus suv? >> the average owner makes $350 a month on getaround. covers complete car cost. we have people making over $1,000 a month. your lexus would be popular, luxury vehicles, bmw, lexus, tesla are on the site. liz: you're kidding. people rent out tesla? >> they do. 50 to $75 an hour and 500 a day. liz: we have elon musk, the cofounder and ceo of tesla on "3 days in the valley". we have to plug that right away. what do you recommend?
certain amount of mileage. how old can the car be? if you have a beater, can beaters apply? >> in general we look for nicer newer cars reliable and great experience for the renters. through insurance we have some restrictions. so the car needs to be 1995 or newer with under 150,000 miles. definitely five years or newer are preferable. you can sign up and set your price based on the type of car you have. liz: sam, what is the toughest thing about starting a new business? you have a lot of would-be startup entrepreneurs watching right now. >> the toughest thing? every startup goes through ups and downs you have to definitely persevere through the downs. a lot of people get to the down and say maybe this is not going to work but you have to have total conviction and go through it especially talking about getting insurance for something like car share. liz: sam and jessica, they're making it happen. they were persistent through the thicks and thins. great to see you both.
folks, the website is ge if you're going on extended vacation, rent out the car, why not? coming up tomorrow we're live inside in a fox business exclusive hewlett-packard's labs. hp labs. this is a rare inside the scenes look behind-the-scenes look of what is going on at hewlett-packard and yes, we do have the relatively new, coming up on one year, brand new ceo, meg whitman, embattled. it has been a tough year. she is trying to turn around this company. it is a fox business exclusive. we'll take up inside hewlett-packard. we'll also show you the garage, yes, more than 70 years, hewlett-packard started in a fwa raj. we're going to take inside. all that and more, david, coming up tomorrow on day two of "3 days in the valley". david: i want to make sure i understand the getaround. that means i could actually rent your car while you're working in the 3:00 so i could tool around from 3:00 to 4:00 and make it here? liz: yes, yes if i may me
enough. david: not doing it for 50 bucks an hour. that is for the tesla. you don't have a tesla yet, do you. liz: not yet. i want one though. david: liz, thank you very much. liz: okay. david: we'll see you. the u.s. credit rating is at risk again but moody's says there is still a way to get the country back on track. we have the details on what needs to be done to prevent yet another downgrade. that's coming up. ally bank. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no. if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally.
david: u.s. credit rating at risk once again for a downgrade. u.s. warning once it doesn't get its fiscal house in order, our very own liz macdonald joining us with details. go ahead. >> media missed story. moody's said entitlement reform is necessary. here is the latest ad campaign talking about medicare and done with art. take a listen. >> the new aarp voter guide is out with facts you need on medicare. fact, barack obama will protect your guaranteed benefits and will not allow medicare to become a voucher care program. >> here is what is key, guaranteed benefits. moody's is saying essentially entitlements are not part of the budgetary process. they're mandatory.
they're separate. that will make it difficult to do entitlement reform. they're saying this is what is driving the threat to possibly downgrade the united states aaa rating at moody's by the end of next year, david, which could happen. moody's is saying half of mandatory spending comes from entitlement. with know 49% of u.s. households after of 2011 get some kind of government payment, whether social security and medicare and medicaid. it will be really tough to do entitlement reform but moody's is saying look you have to get on the stick to do it because it is a driver of long-term government debt problems. there is problem with stability. here is their quote. because of aging of the population, upward pressure on entitlement spending will gradually increase the size of government unless there is significant reform. this is now on the radar screen. they have got to do it. the government has to do it or else the aaa rating is at a threat. david: eventually you run out of other people's money the looks like we're pretty close to that.
emac, thanks very much. one event will dominate the headlines tomorrow and have a big impact on your investments. that is tomorrow's trade today. next hmm, it says here that cheerios helps lower cholesterol
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david: time for the number one thing to watch tomorrow, the federal reserve decision. it will release the interest rate decision at 1230 p.m. ea